Abstract

The process of globalisation has many implications for developing countries in terms of trade and the performance of their economies. The structural adjustment, global trade and the new political economy of development gave rise to many questions regarding the role of transnational corporations and the performance of the markets. In the case of the South Pacific Island Nations (SPINs), the performance of the markets and the role of transnational firms have been a matter of concern. Dependency theorists have attributed this to the process of colonialism and the exploitation of resources by the transnational firms in the post-independence era. However, in the present circumstances and in view of global trade regimes, developing countries in general have to accept that they are part of the global economy. Therefore, strategies to achieve sustainable levels of economic growth must combine policies that support the operation of the market as well as allow governments to intervene in strategic areas such as the environment. SPINs have very little option but to attract foreign investment to achieve economic growth and foreign investment which largely has to come through the transnational firms. Over the last decade, governments of the SPINs have pursued economic policies that provide incentives to foreign firms to invest in their economies. These policies have often been dictated to by the international agencies such as the International Monetary Fund and the World Bank. The experiences of these countries with structural adjustment policies have been articulated both in terms of the positive and negative impacts on the poor and the environment. This paper analyses the role of transnational firms in economic growth and the conflict it creates in the process of environmental management and governance in the SPINs. It explores the questions of markets versus government intervention in the management of the economy and the environment.